Does Your Supply Chain Need a Trip to the Gym?

How do I know I’m unfit and over weight? Easy, I look at those around me! (I’m fixing it by the way)

Knowing if your Supply Chain is unfit is not so easy. OK, it might look healthy, and maybe it’s doing the job OK.

But maybe you should be getting much better performance in terms of cost and service?

Perhaps similar businesses are actually performing at a much higher level?

These simple ‘self-help’ tips will help you assess if you need to get your Supply Chain to the Gym!

First of all, don’t try to check and measure everything. There’s no need. Sure, once you’ve identified a potential issue or opportunity, by all means drill down a bit more. But first off, just check these few ‘vital signs’ of your Supply Chain’s health and fitness.

From working with hundreds of organisations across many countries over the years, these are the really ‘vital’ signs I look for. I’ll include here a few snap shots from our Benchmarking database of 887 companies to help you get the idea.

Customer Service Performance. Supply Chain performance is really all about the customer, or it should be at least. If customer service is poor, you’ll be losing customer loyalty, losing sales and incurring additional costs to ‘fix’ up errors and service failures.

It’s a great place to start when looking for improvements. Because superior customer service performance leads to happier customers, who buy more of your ‘stuff’. And actually, high levels of service can help you save money too! Yes, hard to believe I know, but I’ll show you that later.

These other vital signs can then help you with improving customer service.

Supply Chain Cost as a Percentage of Sales.

We certainly need to get a handle on costs, and this is a good place to start. Let’s have a look at Pharmaceutical Suppliers this time.

Obviously this varies by industry, because of different market needs, handling requirements and product value. But you need to get a grasp of this and what ‘good’ looks like in your industry.

Whatever your industry, if this figure is over 10% I’d say you have problems.

Supplier Performance. Now this is an area that’s often neglected. But it’s so important. Because if you don’t manage your suppliers effectively and monitor their performance, you have a poor chance at the other end of your Supply Chain, to delivery great customer service.

If this is an area of neglect in your business you really do need to fix it. Key things to check are these:

Do you have formal service agreements with Suppliers?

What service performance has been agreed?

Pick your top 20% of Suppliers in terms of spend and check their supply performance.

Here are some SIFOT (Supply In Full On Time) Benchmarks to give you an idea of realistic targes to aim for.

This time we’ll pick on Retail Suppliers again. That is; suppliers to Retail companies.

I would urge you to go and take a look at some of these Vital Signs for your Supply Chain. Maybe you measure them all already? But I suspect you only measure 2 or 3 of them… Check the others and you might be surprised at the opportunities you uncover to start getting your Supply Chain Super Fit!

Supply chain needs trimming, and good lot of exercise is needed to reduce the fat body. Look at procurement, good suppliers, timely supply, and a good deliver, distribution good fleet, efficient customer service.